from the this-taxpayer-money-is-burning-a-hole-in-my-common-sense dept

Fool me once, shame on me. Fool me annually and let me get my checkbook! Losses continue to mount, but some very resilient states are still willing to throw more taxpayer money at the film industry. Michigan -- a state that seems to be able to generate at least one fiscal horror story per year -- is one of the nation's most consistent losers. Two years ago, it bet the state pension fund on film-related subsidies… and lost. When the "investment" failed to generate a return, nearly $2 million was removed from the already-underfunded retirement pool. One small town pinned its hopes and dreams on a film project that promised 3,000 new jobs but instead fell apart, dragging the town towards insolvency.

Michigan has made some moves in the right direction after being burned so often by Hollywood and its fleeting, mercenary "interest" in its state. It paid out nearly $100 million in subsidies in 2011, but that number has dropped to $38 million for the coming year. Michigan House Minority leader Tim Greimel is pushing to bring that back up to $50 million, claiming that the program has been a great job creator -- an assertion that couldn't be farther from the truth.

The state has funnelled $500 million in public funds to its fledgling film industry since 2008, and has almost nothing to show for it. While some jobs were created—temporary production crews, mostly—those were offset by the losses to the sectors of the economy that had to finance the film subsidy (i.e. Economics 101).

In fact, over the past 15 years, job creation has remained almost flat. According to the Bureau of Labor statistics, there were 1,537 in-state jobs in the film industry in 2001. As of 2013, there were 1,564. And in that particular year, the subsidized industry didn't create a single job.

This boondoggle currently costs Michigan taxpayers $50 million a year and even the state’s own economic development agency (MEDC) reported this costly subsidy failed in 2013 to create one permanent job,” said Tricia Kinley, senior director of tax and regulatory reform at the chamber, in an press release.

A study released in 2012 showed that for every Michigan dollar spent on subsidies, the film industry only generated $0.11 of in-state revenue. And yet, politicians like Greimel are still insisting the best way to make money is to spend money -- year after year after year.

Since the program’s inception, nearly $433.5 million in film production tax credits have been approved/awarded to film production companies under the program. These companies, in turn, have directly injected close to $1.8 billion into PA’s economy; generated an estimated $3.2 billion in total economic activity; and supported an estimated 21,700 jobs (based on 2014 IMPLAN multipliers).

There are big problems with the Department's fuzzy math, as Rachel Martin at Watchdog.org points out. For one, it grabs unfinished and pending projects and mixes them in with completed projects to up the totals for both the number of jobs and the amount of money generated. Looking at the state's financial statements reveals something completely different.

[F]rom fiscal 2007 to 2013, only $55 million in credits were awarded and 2,700 jobs were created.

A more sobering assessment put together by the state's Independent Fiscal Office takes a lot of the irrational exuberance out of the Department's fluffed numbers. There's no "anything's possible" math to be found here. The report takes a very long and detailed look at the fiscal performance of the state's film subsidies and finds that -- much like other states -- handing out money to Hollywood doesn't make it rain locally.

In terms of budgetary return, a 2013 report by the state Independent Fiscal Office, “Uncapping the Film Production Tax Credit: a Fiscal and Economic Analysis,” found the state got a return of 14 cents on the dollar for tax credits, from state taxes generated by the program.

This pitiable return rate remains completely unchanged from the conclusions drawn by the Tax Foundation in 2010. Pennsylvania's film subsidies hand out dollar bills to film producers and then follow along behind them to catch any change that might fall out of their pockets. It's easy to sell subsidies to legislators, who are often more interested in the reflected glory of Hollywood projects than in safeguarding the funds they've been entrusted with.

The report also debunks the notion that film subsidies are job creators, much less wealth generators.

Wages constitute more than 60 percent of production expenses receiving credit under the FPTC, and the economic effects of the FPTC depend heavily on the amount of credit-eligible earnings that leave the state. Nonresidents spend only a small share of their earnings in the state while working on a production, thus limiting the impact on the state economy… According to data analyzed by the IFO, approximately 70 percent of production-related wages were paid to nonresidents.

The bottom line, according to the IFO?

The net, fully phased-in fiscal impact for the additional credits authorized in FY 2013-14 is estimated to be -$46.5 million at the lower end… and -$93.1 million at the higher end of the range.

Of course, if Pennsylvania decides to limit or dump its subsidies, it will soon discover that all the money it spent in the past has purchased nothing in the way of loyalty.

As an example of the mobility and fickleness of the industry, consider the show “Banshee.” It filmed its first three seasons in North Carolina, but packed up after that state eliminated its tax credit program and replaced it with a much smaller grant program.

The show will now film in Pittsburgh, which has a built-in irony, given that the show’s setting has always been the fictional Banshee, Pennsylvania.

Given the deficit the state is facing, you'd think legislators would be more than happy to drop the subsidy, if only to prevent the leakage of another $50-90 million. But the glamour of show business -- even if only admired from afar -- is tough to resist. It's easy to mistake the busy milling around of temp workers and nonresident stars for created jobs and positive economic impact. Throwing away 9/10ths of every dollar simply doesn't make sense, especially in a state already severely overdrawn. But nothing involving both Hollywood and accounting ever adds up.

Between 2004 and 2012, the California entertainment industry lost 16,137 film production jobs. During that same period the state of New York increased its entertainment employment by 25 percent. The Milken Institute attributes this shift in employment to the billions of dollars in robust incentives from competitive states like New York, New Mexico, Texas, and Louisiana.

If you can keep all of the money in one place, a state might turn a profit. But with productions scattered all over the US, California will just be another state throwing money at fickle, mostly uninterested productions. A short-term "bribe" never buys loyalty, especially not in the Land of 1,000 Backstabbings. The film industry is still very cutthroat and California's decades-long slide into legislative absurdity has made movie-making within its heavily-taxed confines very unattractive. (And then there's the labor stranglehold, but we'll let that go. For now...) The solution? More taxes! But this time mostly from the little people!

The legislation will increase the annual allocation of state tax credits to $330 million per year, more than triple the current amount, starting with fiscal year 2015-16 and lasting for five years. [...]The legislation also provides extra incentives — beyond the current 20% — for visual effects and music scoring, as well as to producers who shoot in parts of the state outside of the Los Angeles region.

The industry is -- and has been for years at this point -- pay-to-play. Unfortunately, it's the states' long-term residents who are paying the most, and reaping none of the benefits.

from the about-time dept

A few years ago, the major record labels finally started to realize that, perhaps, shoveling many millions of dollars to the RIAA was a waste of good money, and they severely cut back funds. You may have noticed that, while the RIAA had taken the lead on the copyright front in the first decade of the new century, over the past few years, it's been a lot quieter than the MPAA. It appears that the MPAA may be about to go through a similar transition. Just a few weeks ago, we pointed out that the MPAA seemed to be desperately trying to justify its existence by doubling down on ridiculous and misleading claims about "piracy" and "content theft" rather than actually helping studios adapt to the modern era. We also noted that MPAA boss Chris Dodd was on something of an apology tour after the MPAA was caught completely off guard by the Sony Hack and did basically nothing about it, seriously pissing off execs at Sony.

In a behind-the-scenes drama, the Sony Pictures chairman Michael Lynton last month told industry colleagues of a plan to withdraw from the movie trade organization, according to people who have been briefed on the discussions. He cited the organization's slow response and lack of public support in the aftermath of the attack on Sony and its film “The Interview,” as well as longstanding concerns about the cost and efficacy of the group.

While the MPAA convinced Sony to stay in, it appears that the major studios are thinking it's about time the MPAA shift its focus -- and tighten its belt a bit:

If adopted, their still emerging propositions might jolt the group into line with the new realities of a changing entertainment business. They might, for instance, open the association to new members and expand its interests to include television programs or digital content. They might also reduce the heavy annual contribution of more than $20 million that is required of each of the six member companies: Walt Disney, Warner Bros., Paramount Pictures, 20th Century Fox, Universal and Sony.

The report notes that they might even give up their super fancy DC headquarters (the "Jack Valenti Building") which is just blocks from the White House.

Of course, it's not entirely clear how the MPAA's focus will actually change. It wouldn't be surprising to find some studio execs still want to double down on backwards-thinking, anti-internet campaigns. But, at least some seem to recognize that Hollywood hasn't kept up with the times, and that's partly because the MPAA kept focusing them on the last war, rather than on updating for the internet era.

Kevin Tsujihara, the chief executive of Warner Bros., said he, like Mr. Dodd, welcomed an examination of the organization that would mirror a similar review of cost and mission at his company. “Now is as good a time as any” to look at fundamental questions, Mr. Tsujihara said in an interview. He added: “We haven’t, as an industry, evolved fast enough.”

And, as we've pointed out, it really seems bizarre that the MPAA spends so much on an entire "content protection" division. At least some of the studios appear to be questioning the value of that approach:

But those briefed on the position of several companies said virtually all the studios have chafed lately at the high cost of maintaining the M.P.A.A., along with its worldwide antipiracy and market access operations, particularly as Sony, Warner and others are cutting staff and costs.

Frankly, as we've argued for years, it would be great if the MPAA actually became a forward-looking organization that looked to help the industry adapt to the modern era. It appears the organization is going through an inevitable crisis after years of making bad bets. Hopefully, it recognizes that embracing the future, rather than fighting it, is the way forward.

from the shirky-principle dept

In the past we've discussed the Shirky Principle, named after a statement by Clay Shirky that:

"Institutions will try to preserve the problem to which they are the solution."

In some ways that's a corollary to Upton Sinclair's famous quote:

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

I've long believed that the MPAA has this problem in spades. The group, which is supposed to be about helping the big Hollywood studios, has long taken a very different positions. Five years ago, we wrote about how bizarre it was that the MPAA had an entire "Content Protection" division. As we noted at the time, the organization not only had a Chief Content Protection Officer, but also an Executive VP of Content Protection, a Senior VP of Content Protection and a regular VP of Content Protection, and probably a handful of Content Protection Minions or whatever they call their non-VP worker bees.

And yet, there didn't seem to be anyone at the MPAA who had a title along the lines of "Chief Open Internet Evangelist" or "Chief Digital Business Model Strategist" or something along those lines, who could have been working with Hollywood to help transition the organization into the digital age. No, instead that transition has come in fits and starts with the MPAA itself fighting against most of the key moves and doing little to help forward thinking filmmakers and studios. In fact, if you talk to many of the up-and-coming filmmakers these days, they're just as angry about the MPAA's stance as open internet supporters -- because they realize just how counterproductive a "protection" regime is, rather than a "embrace the opportunity" regime would be.

Eli Dourado has written up a fantastic discussion of this very idea, by focusing on two key things that came out of the Sony Hack that, together, more or less highlight the point above: that the MPAA is not pro-Hollywood at all, but rather seems entirely focused on "giving itself a reason to exist, rather than solving the film industry's" challenges. Specifically he highlights these two things:

Leaked emails revealed the Motion Picture Association of America’s ongoing plans to censor the Internet to reduce digital film piracy.

The hack prompted a surprise, online Christmas Eve release of The Interview that let us observe the effect of a new distribution model on film revenue.

We have, of course, covered both of these, but Dourado puts them together nicely in context, showing how the MPAA's site-blocking/filtering/censorship strategy is one focused on destroying many of the opportunities of the internet, while the digital release of The Interview showed how embracing digital can actually be quite useful for Hollywood -- not that the MPAA wants anything to do with that at all.

When put together, these vignettes raise important questions about the future of the film industry and its lobbying efforts. Is the MPAA really representing Hollywood’s long-term interests in Washington, or is it trying to fight old battles over and over in an attempt to justify its own existence?

Dourado goes through the detailed history -- revealed by the Sony Hack -- of how, post-SOPA, the MPAA has regrouped to focus on ways to bring back site-blocking and censorship online, while simultaneously attacking Google at every turn (even when Google did exactly what the MPAA asked for and demoted sites the MPAA dislikes). As Dourado notes:

But the more striking point is what this strategy reveals about the MPAA: the organization still deeply believes in site blocking as more or less the solution to online piracy. It continues to position itself as an enemy of the open Internet.

From there, he discusses the success of the online release of The Interview, pointing out how well it did. Of course, some of that may have been because of all the (somewhat questionable) news about the supposed threat from North Korea, leading some to choose to watch it for patriotic reasons. Still, Dourado notes that, while there was piracy of the film as well, much of it came outside the US, because Sony initially limited the release to US only online. And the movie did make a fair bit of money online and, perhaps more importantly, got people to pay attention to its online efforts:

There is additional evidence that the online release was a win for Sony: its YouTube channel gained 243,000 new subscribers in the aftermath of the Interview release. As YouTube entrepreneurs like Michelle Phan would note, subscribers are as good as cash, a ready source of revenue for future online movie releases, if Sony decides to do more of them.

The Interview episode shows that the Internet need not be viewed only as a source of piracy. With a modest change in business model, it can also be the film industry’s next great distribution platform.

And then you get to the divergence question: which strategy is best for Hollywood and the film industry... and which strategy is best for the MPAA? Take a wild guess:

What is the best strategy for the film industry going forward? Should it continue to fight the open Internet, as it did with SOPA, and as it has continued to do through state AG investigations and lobbying the ITC? Or should it embrace the Internet as a potentially profitable distribution platform that is in any case here to stay?

It’s clear which strategy the MPAA, the lobbying organization, prefers. If the studios were to truly embrace the Internet, the MPAA would have a much diminished reason for existence. There is no one you need to lobby in order to release films online. Many employees, such as chairman Chris Dodd and general counsel Steven Fabrizio, would have little to do. The organization would have to go back to administering its film ratings system and asking states for ridiculous film tax credits.

He goes even further, pointing out that this stupid focus on "content protection" has been shown time and time again not to work, whereas embracing the internet seems much more likely to work. But, of course, it would leave the MPAA with less things to do. And thus, to me, it goes all the way back around to the Shirky Principle. The MPAA has to keep focusing on "the piracy problem" because it has set itself up as "the solution" to that problem, perhaps knowing full well that it's a solution that can never be solved. Yet, because of this, it guarantees a large role for itself, convincing gullible studio bosses to keep forking money over to the MPAA, so that its leadership can keep earning multi-million dollar salaries.

The real issue here is that, as younger, more internet-savvy filmmakers continue to bubble up throughout Hollywood, sooner or later more of them are going to realize what a farce the MPAA has become. And just like the MPAA's "content protection" strategy has totally failed Hollywood, eventually it's going to totally fail itself as well. That's what you get for fighting the future, rather than embracing it.

from the bigger-and-better-is-bad dept

We're getting close to the two-year anniversary of the Center for Copyright Information's (CCI) "six strikes" anti-piracy regime. The program, with cooperation from the biggest ISPs, involves forwarding on copyright infringement notices to consumers and punishing users via a "graduated response" program. Said responses vary by ISP but can include a user being temporarily locked behind a walled garden filter until they acknowledge receipt of one-sided "educational" materials, or having your connection throttled temporarily until you admit you've been naughty. If innocent, you have to pay a $35 fine to defend yourself.

While the program might seem effective in scaring little Billy straight once his parents notice their connection doesn't work, it clearly hasn't had much of a meaningful impact on piracy rates. Unsurprisingly, the entertainment industry argues this is because the measures don't go far enough; nobody tracks offenders between ISPs, absolutely nothing happens to a user that violates all six strikes (the program simply stops and no more notifications are sent) and most users can simply hide their behavior behind the use of BitTorrent proxy services.

That hasn't stopped CCI from frequently trumpeting six strikes as a smashing success, often using unreliable, contradictory evidence (when it can be bothered to show evidence at all) to support their argument that forcing ISPs into the role of content nannies is a great idea. Privately however, newly leaked MPAA documents suggest the entertainment industry isn't so sure six strikes is doing much of anything.

The leaked documents show the program isn't having quite the impact the MPAA would like, though again, unsurprisingly, the MPAA believes that's only because the program isn't big enough yet. While there's the occasional attempt to suggest that offenders change their ways after receiving notices, the document then proceeds to note the MPAA actually has no idea if people change their behavior, since it's possible they switched ISPs or are hiding their behavior via BitTorrent proxy services:

"The U.S. system is “not yet at scale” or operating with “enough education support” according to the MPAA. As a result the CAS has not made an “impact on the overall [piracy] landscape...“No current information as to the behavior of users who appear to stop P2P infringement – do not know whether [they are] migrating to other pirate systems or to lawful services,” the statement reads."

The MPAA's solution to this problem? Make Six Strikes bigger, bolder and thereby worse:

"Attainability as to existing programs boils down to whether ISPs will agree (a) to expand scale to levels that might impact overall P2P piracy, and (b) to enhance remedial measures so as to improve efficacy,” the MPAA writes."

I've spoken to execs at two large ISPs who have admitted privately they know most pirates have simply started using proxy services, but the ISPs are playing along begrudgingly. Already a bit put off by the added paperwork, few are going to be keen on an a voluntary expansion of the program. As such, look for the entertainment industry to lobby heavily to have this year's rewrite of the Communications Act include numerous new treasures aimed at ISP compliance of a plan expansion. Perhaps after that we can proceed to banning the use of VPNs and proxies entirely for the good of the nation?

from the glass-half-full dept

Most reasonable people and businesses are excited about how Google Fiber is shaking up the uncompetitive broadband industry, and bringing new opportunities to a select few cities. That doesn't include Hollywood (with its deep love of Google in tow), which apparently thinks Google Fiber is a bad thing because it might spike piracy rates. Leaked data suggests that Warner Brothers and Sony Pictures Entertainment launched a survey back in 2012 to track piracy rates before and after Google Fiber deployment in Kansas City. About 2,000 individuals between the ages of 13 and 54 were asked about Google Fiber, piracy, and their media consumption habits.

Unsurprisingly, more than half of those surveyed said they were interested in signing up for $70, 1 Gbps connections (or Google's 5 Mbps connection, which is free after a $300 installation fee). Of those survey participants who said they pirated content, roughly a third stated that they'd likely pirate more often with a connection of that speed. In traditional entertainment industry logic, each instance of infringement is counted as a sale loss, and therefore the survey magically concludes that Google Fiber would be responsible for $1 billion in additional piracy losses annually:

The survey continues and ties piracy rates directly to downstream broadband speeds, proclaiming this is "another indication that piracy becomes more attractive with Google Fiber":

If you haven't come to this conclusion yet on your own, all of this logic is utterly stupid, given that faster speeds result in an overall increase in all online behavior, including the use of legitimate content services. Everything becomes more attractive with better broadband connections. The survey even notes this, 39% of the respondents stating they would use paid streaming subscription services more, and 34% stating they would rent and purchase online videos more frequently. Unsurprisingly, the entertainment industry doesn't bother to calculate these potential sales, nor does it calculate the potential sale opportunities created by offering better services that would only work on ultra-fast connections.

It's yet another example of the entertainment industry's ridiculously narrow thinking when it comes to, well, everything. A reasonable businessman (or woman) would look at those ultra-fast speeds and see opportunity. The entertainment industry looks at these same connections and can only see menace and bogeymen.

from the because-of-course-not dept

Google has come out with the latest version of its "How Google Fights Piracy" report (pdf link), going to great lengths to show how the company goes above and beyond what is required by law to try to drive people to authorized copies of content while also increasing opportunities for content creators to monetize their own content. There really aren't too many surprises in the report -- it just looks like an extension of what they've said in the past. The company is apparently about to roll out an update to its program that "downranks" certain sites based on how many DMCA notices it gets -- something that's been a huge point of contention from the RIAA and MPAA. In effect Google is basically saying to the major music and movie companies: you guys still haven't figured out how to optimize your content for search engines (like nearly everyone else online) so, fuck it, we'll do it for you if you'll just stop these ridiculous accusations. Of course, it's unlikely to work.

Just this week James Murdoch insisted, incorrectly, that search engines love piracy because it brings them revenue. This has never made any sense at all, but it's a myth that flows through the legacy entertainment industry. How Google actually makes any money from those links is never explained, because there isn't an answer. And the question of why the industry doesn't do a better job getting its own content more highly ranked is ignored as well.

And, of course, there's a real risk that by strengthening the "signalling" power of DMCA notices, what Google is really doing is giving the legacy players a tool for search engine "de-optimization", so that rather than improving their own offerings, they now have every incentive in the world to just file a bunch of DMCA notices against sites they don't like. This is why there's reasonable fear from many that this new move by Google will actually lead to an increase in bogus DMCA notices that result in legitimate content being censored.

But, here's the thing: as we said when Google first came out with this report, it will never be enough for the legacy guys in Hollywood. That's because they incorrectly blame Google for their own inability to adapt to the changing market. They blame their diminishing revenue on Google, and even as Google makes it harder and harder to find unauthorized content, that revenue isn't going to come back... so they'll still blame Google. But Google was never the problem. The legacy entertainment industry and its political supporters will continue to point to search results that don't exist and search terms that are never used as some sort of "proof" because that's what they do. Rather than adapt, they really just want Google to do things for them. And for whatever reason, Google is doing more and more... and it's unlikely to ever please the likes of James Murdoch, because Google "not doing things" was never the real problem.

from the curious... dept

Remember those days when YouTube was "killing" the entertainment industry. You don't even have to look back very far. There are artists who still insist that YouTube is killing creativity and is nothing but a den of piracy. Viacom spent years trying to argue that YouTube was the equivalent of Napster, but for video, until that lawsuit finally settled just a few months ago.

However, reality is looking pretty different these days. A couple months ago, Businessweek had a big cover story about how YouTube has become Hollywood's "hit factory", and just this week, YouTube revealed that its ContentID program, which allows copyright holders to monetize unauthorized uses of their works, had paid out over $1 billion since its inception. This isn't to say there aren't problems with ContentID. We've noted in the past the problems with false flagging, revenue diversion and other issues -- but the simple fact is that it appears to be making money for content creators. Actually, quite a lot of money.

And this brings us back to a key point that we've hit on over and over and over again: given a chance to operate, these business models tend to come about without the need to pass draconian copyright laws and without the need to completely takedown and destroy businesses. When allowed to thrive, innovate and experiment, it's only natural that workable business models develop. We've seen it over and over again in the industry. The recording industry insisted radio was going to kill the entire industry -- and then it made the industry into a massive juggernaut. The movie industry insisted that the VCR would be its "Boston Strangler," but four years later home video outpaced the box office in generating revenue for the studios.

The continuous claims of "Hollywood vs. Silicon Valley" on copyright issues is so clearly bogus. As we've argued for years, it's the innovations of the tech industry that keep saving the entertainment industry over and over and over again. There's no "war" between the two when it appears that Silicon Valley is the one supplying the "weapons" that's making Hollywood very, very wealthy.

But when will those folks in Hollywood learn this? Instead, they keep attacking these new services, demanding more copyright "enforcement" and blocking these forms of innovation. Who knows what other innovations might have occurred had the industry not shut down Veoh. Or Grokster. Before the US government completely shut down Megaupload, it was experimenting with new revenue models were attracting the interest of lots of famous musicians. Imagine if that had been allowed to continue. Who knows what other kinds of cool business models would be in place today making more money for artists.

Attacking innovation seems to be the legacy entertainment industry's default position, no matter how many times that innovation actually opens up new markets, provides new revenue streams and makes pretty much everyone better off. Oh, except some of the gatekeepers. Those guys tend not to be able to keep quite as much of the revenue generated by these new platforms. And maybe, just maybe, that's the real reason they're so angry about innovation.

from the huh? dept

We remain absolutely baffled by the FAA's bizarre rules about drones. As we've noted, the FAA has said that you can use drones for fun, but if it in any way involves profit, it's not allowed. So you can use a drone to take photographs from the sky for personal use, but if you're a real estate agent trying to do a flyover of a house you're trying to sell, that's illegal. And while some people still claim that drone use should be limited so they don't interfere with airplanes, that doesn't seem to (even remotely) be the concern here, otherwise the personal use of drones would be barred too.

But it's getting even more bizarre. Now, it seems that anyone who wants to use drones in anything close to an innovative way has to first go beg the FAA for permission. And the permission is sometimes given and sometimes withheld. Compare these two stories. The University of Michigan wanted to use drones to deliver the game ball before kickoff of a football game, but the FAA nixed the request. It's not at all clear why. This was for a sporting event, and it would just be for fun. It's hard to see how the use was "commercial" other than the fact that college football is big business. Meanwhile, compare that to the fact that the FAA is apparently granting permission to Hollywood to use drones to film things:

In May, seven aerial photo and video production companies asked for regulatory exemptions (known as a 333 exemption) that would allow the film and television industry to use drones with FAA approval. Those seven companies and the Motion Picture Association of America (MPAA), were asked by the FAA to develop the guidelines and safety procedures under which they planned to operate. The FAA reviewed those procedures and is expected to approve the drone-specific rules and standards that will enable Hollywood to be exempt from existing aviation regulations.

Of course, the report from Forbes notes, this actually took four years of back and forth with the FAA to get to this point.

We've talked for a while about the concept of permissionless innovation and why it's important to keep the velocity of innovation moving forward at a rapid pace. Adding in this layer of bizarre, arbitrary and ridiculously slow regulation, and you're slowing down that pace. And while some say "does that really matter" for something as silly as flying drones, as we've noted, it's entirely possible that drones can create some amazingly powerful societal shifts. But each bit of "permission" needed along the way slows down that process and limits our ability to innovate and to adapt and adjust and learn.

from the more-of-this-crap? dept

There's apparently a new TV show on CBS called Scorpion that has received mixed-to-decent reviews. It supposedly is about some computer security geniuses/outcasts who help "solve complex, global problems." However, Annalee Newitz's description of the stupidest, most batshit insane hacker scene ever from the first episode, suggests that the show is not worth watching. In the past few years, it had been kind of nice to see Hollywood actually seem to have some clue about accurately portraying hacking in some situations, but that's all apparently been tossed out the window with Scorpion. Even if you don't read Newitz's story (or view the video clip), just know it involves an ethernet cable hanging from a flying plane with a car racing beneath it to download some backup software needed by the airport so planes can land. Yeah.

A big part of the show's marketing is the claim that the story is partially based on the life of one of the show's executive producers, Walter O'Brien. CBS News has an article talking up these claims of O'Brien's amazing feats, helping out its parent company, CBS, who broadcasts the show. But... for such a "genius," many of O'Brien's claims are coming under scrutiny, and they're not holding up well. Having just gone through the whole Shiva Ayyadurai / inventor of email crap, it's beginning to sound like a similar case of someone pumping up their own past for publicity purposes.

The claims about O'Brien are both odd and oddly specific. Here's CBS's reporting:

Walter O’Brien has the fourth highest IQ in the world.

Elsewhere, he claims that he was "diagnosed as a child prodigy with an IQ of 197." First off, there are significant questions about IQ as a particularly useful measurement of anything. Furthermore, the idea that there's some definitive list of those with the highest IQs seems equally questionable. A quick Google search will show you a whole bunch of "top 10 lists" of IQs -- all of them different, and none of them including anyone named Walter O'Brien.

Among other things, O'Brien's story claims that he began Scorpion Computer Services in the mid-1980s and that "Scorpion has mitigated risk for 7 years on $1.9 trillion of investments and has invented and applied Artificial Intelligence engines to protect United States war fighters in Afghanistan." It's not even entirely clear what that means. It goes on:

Since 1988, Scorpion's team of world class experts partner with clients on a global basis, across industries, to add real measurable value in mission-critical initiatives from planning, to execution, to running the business. Scorpion's senior management has a collective knowledge of more than 413 technologies, 210 years in IT, and 1,360 projects. Scorpion himself has created over 177 unique technology inventions including ScenGen and WinLocX and is one of the world's leading experts in the application of computer science and artificial intelligence to solve complex industry challenges."

Again with the odd, and oddly specific claims. They have knowledge of 413 technologies? Do they have a list somewhere? Does it include the coffee machine in the lunch room? Did they send someone out to get the new iPhone 6 to make it 414? Either way, there are... just a few problems with these claims. As Langton points out, the "headquarters" of Scorpion Computer Services Inc. does not appear to be a particularly large or impressive company. Its headquarters is actually... a UPS store address That report notes that it has one employee, and revenue of $66k. It's possible that the report is inaccurate, but for such a big and successful company, you'd expect to see... at least a bit more historical evidence of its existence. But there is none.

And then there's this page (and here's the web archive version in case O'Brien figures out how to delete the old page), which apparently used to be the site for Walter's Scorpion computer Services, that, um, looks like it was built on GeoCities -- complete with the animated fire torches next to the dreadfully designed logo.

For a big, massively successful company... you'd expect, um, something a bit more professional. Walter's own Linkedin profile notes that he actually worked at Capital Group for a while, with redditors claiming he was just a QA guy there, though his profile says he was a "technology executive." Many other claims on the company's website read like self-promotional gibberish. "We saved $43 billion in opportunity risks over a five-year period." "We invented an efficiency engine that performs 250 human years of work every 1.5 hrs with over 99% improvement over human error." By the way, the "see how" link on that last one doesn't actually show you "how" it just takes you to a page about how the company is a value added reseller "for proven IT products." The entire website looks like gibberish from someone trying to sound like a real tech company. It reminds me of Jukt Micronics.

Langton also turned up that O'Brien appears to have another "company" called Strike Force, using the same UPS Store address, and with very, very, very, very similar website design and bullshittery. That site has a really bizarre "what others say" page, listing out random referrals for O'Brien, which are generally just the standard empty "personal reference letters" people without much experience tend to ask some former colleagues for when looking for a new job. The first one is from Steven Messino (with the date conveniently stripped off) which looks like the generic job reference letter:

Note that O'Brien claims that Messino is the co-founder of Sun. That's... not true. Anyone who knows anything about the history of Sun knows it was co-founded by Andy Bechtolsheim, Bill Joy, Scott McNealy and Vinod Khosla in 1982. Messino's own LinkedIn page shows he joined Sun in 1988. Six years after it was founded. Also, Sun had its IPO in 1986. So it's not like this was a small company when Messino joined... as a "regional sales manager."

Basically, everywhere you look, O'Brien's claims are either massively exaggerated to downright ridiculous.

There are also some odd personal claims about "Homeland Security" coming to find him as a 13-year old boy for hacking into NASA. Except, when he was 13, there was no Homeland Security -- an agency established after the September 11, 2001 attacks. O'Brien also claims this:

Scorpion was born and raised in Ireland, and at 16, ranked first in national high speed computer problem solving competitions. At 18, he competed in the World Olympics in Informatics and has ranked as high as the sixth fastest programmer in the world.

Sixth fastest programmer in the world? Really? Some folks on Reddit noted that it doesn't appear Ireland competed in the "International Olympiad in Informatics" in 1993, though someone else found a report from the University of Sussex, which O'Brien attended, noting that O'Brien had come in 6th in a different contest, but in the Olympiad itself, he came in 90th. I mean that's great for an 18 year old, but it hardly makes him into some programming genius.

And we won't even touch the claims that his programming helped catch the Boston Marathon bombers, because... well... really?

Frankly, the parallels with Ayyadurai and the email story are there. It certainly appears that, like Ayyadurai, O'Brien was a bright kid who did some impressive programming as a teenager, but then didn't appear to amount to all that much noteworthy beyond that. Try searching for any news references or evidence of O'Brien doing anything other than in the last few months in the publicity leading up to this new TV show. However, he is trying to reinvent himself and rewrite his history as some sort of genius programmer responsible for all sorts of amazing things, very little of which seems directly supportable. Of course, CBS doesn't really care, so long as they have a fun TV show that people watch, but at the very least, they shouldn't continue to spread the exaggerated myths about O'Brien that appear to have little basis in fact.

from the total-overreaction dept

While we've written plenty about Peter Sunde, the former spokesperson for The Pirate Bay, we didn't cover his eventual jailing earlier this year. Given all the coverage of his trial and efforts post-trial to have the results revisited, the fact that he finally ended up going to jail didn't seem like much of a story. However, the way in which he's been treated in jail is simply inhumane. He's been put in the equivalent of a maximum security prison and basic requests for more humane treatment have been rejected. The latest outrage was that Peter's father recently passed away, and while prison officials have said they'll make arrangements for him to attend the funeral, he'll have to wear handcuffs. TorrentFreak says he'll have to wear handcuffs while carrying his father's coffin -- but from Peter's brother's quote, it seems clear that the prison officials were actually saying he can't even carry his father's coffin. The handcuff remark was just their way of saying "fuck you."

“But I will carry my father’s coffin,” Mats’ reports Peter as saying.

“You can not count on it,” the guards responded. “You will be wearing handcuffs.”

In response to this, a bunch of more open-minded Hollywood insiders, including actors, writers, directors, producers, camera people and others have quickly put together a video in support of Peter, asking that he be freed or, at the very least, treated with some dignity.

The video was put together by Lexi Alexander, a Hollywood director who has gotten some attention in recent months for her outspoken criticism of the way traditional Hollywood has attacked the internet and file sharing in particular. Views like hers are not uncommon in Hollywood -- we frequently hear from insiders telling similar tales, including this one from an industry lawyer who talked about how those working in studios often encourage piracy for their own benefit. But, it's still rare for those in Hollywood to speak out about it, because of the prevailing view among the old guard.

TorrentFreak has some details about who's in this particular video (some chose to remain anonymous, while others agreed to go public), and it's interesting to see that one of the participants was a writer on Sons of Anarchy, since that show's creator has been one of the most outspoken (if extraordinarily confused) of the old guard, attacking anything online he doesn't like and blaming piracy for everything bad that's ever happened in the world.

That said, what still amazes me is that Peter is in this position at all. It seems to come from a sort of "file sharing tunnel vision" that some copyright maximalists have at times, in which all perspective and nuance goes out the window. They know they hate The Pirate Bay. They know that Peter was associated with the Pirate Bay, and thus they automatically assume that horrible things should happen to him. What amazed me throughout the whole situation was that if you actually stopped and looked at reality, Peter should never be in such a situation at all. To be honest, part of the problem may go back to Peter himself, as he never really seemed to take the trial against him that seriously -- and while the joking around and mocking of the trial while it was going on may have been fun at the time, it may have hurt the defense and actually further contributed to the tunnel vision against him. Those making the judgment could only see "these guys lack respect for authority" and thus they must have done something criminal.

But it's still difficult to see how anything Peter did was actually criminal in any way, shape, or form. He worked for a site that did not infringe on any copyrights directly, but acted as a conduit for people to share files, many of which were unauthorized, but plenty of which were also authorized. And he was the site's spokesperson. Yes, he mocked those who threatened and attacked the site, but that's just speaking freely. It's difficult to see how anything he did should be criminal at all, let alone deserving of many months in a maximum security prison reserved for violent offenders.

Anyone who's actually taken the time to get beyond the tunnel vision thinking of "Pirate Bay = Evil" kind of thinking, or looks past Peter's proclivity to mock authority (a useful trait), can clearly see that he's always been a very thoughtful, philosophical observer of humanity, technology and economics. For years, he's worked hard to help artists do more online, not to hurt them. Even at the Pirate Bay, he made efforts to help artists understand how to embrace it for their own benefit, and then later created and helped build Flattr as a tool to help creators make money. The idea that he's been treated as on par with a violent criminal is, frankly, disgusting.

Even if you absolutely hate The Pirate Bay and think it's the worst thing that's ever happened to the entertainment industry (a ridiculous view, but nonetheless...), the idea that the legal recourse against it should have been criminal, rather than civil charges, is mind-boggling. The idea that the site's spokesperson, who had little to do with the actual operations for the site should be criminally charged and convicted is equally ridiculous. And then the fact that he's treated at the same level as a violent criminal, and treated with such little respect and dignity concerning his own father's funeral is a travesty of justice. The lack of perspective from some who see piracy and think "lock him up and throw away the key" is immensely troubling.

Copyright should never be a criminal issue at all. The treatment of Peter Sunde just puts a massive, if terribly troubling, exclamation point on that statement.